#supply-chain
Thread
Hey Everyone, we discovered over time that we have a very solid product-market-fit within the UK. However, we keep our inventory within The Netherlands, and the duties + VAT is eating all of our profits per order within the UK. Has anyone figured out an efficient set up for this?
Thinking outloud here. Setting up a UK subsidiary might be helpful in streamlining this.
- UK subsidary (1 day, 1 pound setup)
- Your Dutch co sells the goods (exports) to UK entity at no margin, some low price. This should technically minimise duties.
- UK company imports the goods, pays VAT. Usually reclaimable in full.
- UK entity stocks and warehouses the goods locally and charges vat from local customers. This setup helps VAT transparency and customer experience, and your UK entity can reclaim VAT, so it doesn’t eat into margins long-term. You might negotiate better fulfillment/warehouse terms locally too. Your profit margin should improve through operational efficiency.
I would double/triple check my thinking here 🙂 Again, just thinking outloud.
we had to close UK down for us for a while to fix this. We now fixed VAT via Avalara and applied for a British BV.
And then the most important part: We stack the most important SKUs in a British warehouse, which is run by our Dutch 3PL Monta. Same system, same pricing, just split across both NL and UK
the big saving here for us is the returns part - we can now bundle them and hence only pay domestic shipping per parcel, and then sometimes we can ship a full pallet back to NL if needed.
Thank you @Madi Ablyazov @Kasper - LABFRESH!